First Year of Living Off Investments: FIRE Portfolio & Returns

Hi, welcome back to Sense and Sensitivity. If you're new here, this

Sensitivity. If you're new here, this channel follows how Christine and I design a life beyond the 9 to5 after leaving our corporate careers in law and architectural visualization.

>> 2025 was our first year living off our investment portfolio. Our first real

investment portfolio. Our first real test of early retirement. We are

currently traveling in Seville, Spain, spending Christmas and New Year here.

Afterwards, we will head to Tokyo, Japan. And this lifestyle is funded by

Japan. And this lifestyle is funded by the investment decisions we're about to share. Financially, 2025 has been a

share. Financially, 2025 has been a strong year. Our portfolio balance was

strong year. Our portfolio balance was up 18.4%.

This includes market returns and the last months of income we earned in the first half of the year minus our living expenses for 2025.

>> In this video, we will walk through what I call our lazy portfolio designed to be simple and sustainable. It doesn't

require deep financial knowledge. You

don't need to spend days reading company reports and takes about 30 minutes a year to maintain. We will share our exact allocation, our investment philosophy, and how the portfolio performed in 2025.

>> As always, we are not financial advisers, and nothing here should be taken as investment advice.

>> Let's go straight to our allocation across the major asset classes. We split

our money into three distinct buckets.

76% in equity. This is our primary growth engine. 17% in bonds and cash.

growth engine. 17% in bonds and cash.

This is our safety net. 70% in crypto and venture capital. This is our small offset bet within our 76% equity allocation. We keep it very simple.

allocation. We keep it very simple.

Three ETFs, all passive funds tracking global indexes. SWRD is our core. It

global indexes. SWRD is our core. It

tracks large and midcap companies across 23 developed countries including the US, Europe, Japan, and Australia. WSML adds

developed market small caps. So, we're

not only owning the giants. Small

companies are a different engine of growth and they don't always move in sync with me caps and EMI gives us emerging markets places like China, India, Brazil. So we're not making a

India, Brazil. So we're not making a hidden bet that the future only belongs to already developed countries. Our

allocation is proportional to real life market weights. These three combined, we

market weights. These three combined, we basically own a tiny slice of the entire global capital market diversified by geography and by company size.

>> Why these funds specifically? Our

strategy is simple. We aim for the market's average return using passive index funds. These are what we believe

index funds. These are what we believe in. One, global diversification. We

in. One, global diversification. We

don't bet our future just on one country or a sector. Two, low costs. We choose

passively managed funds with low expense ratios so fees don't eat into our returns. Three, simple process. We want

returns. Three, simple process. We want

a system that works without constant management. The whole point is to buy

management. The whole point is to buy back our time, not to create a second job called investing. And these three principles naturally lead us to our default approach, passive index funds.

>> The baseline is that the stock market's average return is actually quite extraordinary when compounded over decades. For the global stock market,

decades. For the global stock market, the long-term average return has been roughly 8.3% per year before inflation.

With this kind of return, 10K USD today will grow into 28K in 20 years and 47K in 30 years. owing today's dollars after adjusted for inflation. Not some get

rich quickly scheme, but good enough for us as our end goal is to have the freedom to live life on our own terms, not to get as rich as we possibly can.

>> Could we have made much more by going all in on something like Nvidia? Yes,

but that's not going to give us the peace of mind that we enjoy now. Even

companies that look invincible can fall out of favor over time. And if our financial security depends on a few companies, we'd be under constant anxiety. checking at it every day. When

anxiety. checking at it every day. When

should we sell? What if it crashes? What

if we're wrong?

>> The fact is that beating the market consistently is extremely hard. A small

minority of stocks drive most growth in the stock market. Nearly 90% of active large cap funds managed by people with supercomputers, PhDs, insider data

underperform the S&P 500 over 10 years.

If full-time professionals struggle to beat the market consistently, we're not going to build our retirement plan around thinking we can.

>> So, index investing is our default. By

owning the index, you own a piece of the whole market, and it naturally replaces the losers with the next generation of winners. I personally do enjoy some

winners. I personally do enjoy some active trading as intellectual stimulation. It helps me stay engaged

stimulation. It helps me stay engaged with global events now that I'm not actively working. But, it's a hobby in a

actively working. But, it's a hobby in a sandbox, and I don't take it too seriously. We picked ETFs with low fees,

seriously. We picked ETFs with low fees, large assets under management, and strong trading volume because that usually means tighter spreads, and less transaction costs when we rebalance. And

because we're not US-based investors, all the funds that we invest in are Ireland's domiciled ETFs for two reasons. First, US dividend withholding.

reasons. First, US dividend withholding.

If you own US assets directly as a non- US investor, withholding can be up to 30%. For Ireland doiciled funds, because

30%. For Ireland doiciled funds, because of the US island bilateral treaty, US dividends inside the fund are typically withheld at 15%. Which reduces the

dividend drag over time. Second, US

estate tax risk. For non- US residents, US situs assets can trigger estate tax filing above $60,000 and tax rates can go up to 40%. Irish

funds help us avoid holding US domicile ETFs directly. So, how did these funds

ETFs directly. So, how did these funds do in 2025? SWRD grew by 21.5%.

WSML 21.2%.

EIMI 30.46%.

And this year was a great reminder of what diversification actually feels like. After a long stretch of US

like. After a long stretch of US dominance, especially with AI excitement concentrating in big American tech companies, people often ask why bother with international market at all.

>> For us, there are three reasons. First,

even if you buy a global fund, you're already very US-heavy. The US is around 60 to 65% of the global equity market cap. Second, market leadership does

cap. Second, market leadership does rotate. There are long periods where the

rotate. There are long periods where the US leads and long periods where it doesn't. For example, from 2000 to 2007,

doesn't. For example, from 2000 to 2007, the return of the developed markets excluding the US beat the S&P 500 by 36% cumulatively. Third, valuations. A

cumulatively. Third, valuations. A

simple way to think about valuation is the PE ratio. how much investors are paying for $1 of corporate earnings.

Currently, the S&P 500's trailing PE is in the low30s, while the rest of the world is around 17. This means that US stocks are currently overvalued compared to other markets. Does that guarantee

international will outperform the US over the next decade? No. But

diversification reduces concentration risk. We don't know who will win next,

risk. We don't know who will win next, and we don't want our retirement to depend on guessing, right? Early

retirement isn't just about getting a good average return. It's about what happens in the bad years. So, we keep 17% of our portfolio in what we call our

safety net. 6% in AGU and 11% in

safety net. 6% in AGU and 11% in one-year US Treasury bills. The goal

here isn't to beat stocks, but avoid selling stocks in the crash. Agu is in global investment grade bond fund.

Investment grade basically means higher credit quality, so chance of default is much lower than the high yield junk bonds. HU is US dollars hedged. Usually,

bonds. HU is US dollars hedged. Usually,

you'd want your bonds to be in the currency you're spending, but since we haven't decided on a forever home yet, we keep it in US dollars for now. Then,

we use one-year US government bonds as our cash reserve. These are what we plan to spend from in the near term. Bonds

can still be volatile when interest rates move. 2022 was the perfect

rates move. 2022 was the perfect example. Stocks fell and bonds fell too.

example. Stocks fell and bonds fell too.

AGU was down about 11.65% that year.

That's why we do keep a chunky cash-like buffer for short horizons. The T bills we hold now bear an interest rate in the ballpark of 4%. HGU is up 4.49% this

year. Not so impressive compared to

year. Not so impressive compared to stocks, which leads us to the next question. Why hold bonds when it drags

question. Why hold bonds when it drags the return and how to decide on the bond versus equity allocation?

>> We are still young and we are planning for a very early retirement. So, we need growth assets over long-term horizons.

Stocks have been the main engine for growing real purchasing power, they gave us a share of global innovation and rising corporate earnings. While a lot of people see stocks as risky, we

actually see not owning enough stocks as a real risk. Inflation is quite but relentless. For early retirees like us,

relentless. For early retirees like us, it is very possible to run out of money in 50 or 60 years. Stocks are the only proven hedge that can sustain a portfolio for half a century. But while

stocks are reliable over 30 years, they are chaotic over 3 years. During the

financial crisis, the S&P 500 fell about 57% from its 2007 peak to its 2009 low.

And the real damage happens if you're forced to sell during a crash, either because you need cash or because you panic sell. That turns a temporary drop

panic sell. That turns a temporary drop into a permanent loss. That's why early retirees face a specific danger.

Sequence of returns risk. getting bad

returns early right when you start withdrawing. Two people can earn the

withdrawing. Two people can earn the same average return over 20 years, but the one who gets the big crash in the first few years can end up much worse off simply because they had to sell shares at depressed prices to fund their

life.

>> That's the job of bonds and cash in our plan. Bonds usually fluctuate less than

plan. Bonds usually fluctuate less than stocks, sometimes even rise when stocks fall. So when stocks are down, we can

fall. So when stocks are down, we can spend from the buffer instead of selling equities at a discount. That gives the stock portion time to recover and makes the whole plan more resilient. For us, a

10 to 20% bonds and cash buffer feels like a sweet spot. Enough stability to cover our spending for the next few years without giving up too much long-term growth.

>> And with the primary growth engine and the safety net in place, we can add in some risky bets. Right now, 7% of our portfolio is split between VC funds and cryptocurrencies. The amount is big

cryptocurrencies. The amount is big enough to move the needle if things go well, but small enough that we can swallow a total loss without losing our freedom.

>> Venture capital investments came through opportunities from a previous job as appropriate lawyer. VC is a very

appropriate lawyer. VC is a very specific kind of risk. It's illquid. It

has long lock caps and outcomes are extremely uneven. In venture capital, a

extremely uneven. In venture capital, a small handful of winners drive most results and it can take years to know how you actually did. If you're a qualified investor, you can get VC exposure through online platforms like

Angelist, but you usually don't get to control the terms. The fees can be higher and the opportunities can be more hit or miss.

>> For crypto, we aim for about 5% of our total portfolio. I've been in the crypto

total portfolio. I've been in the crypto space for 8 years, and I'm a long-term believer. What makes crypto compelling

believer. What makes crypto compelling is that it's become a globally traded asset class with different return drivers than stocks and bonds. In 2025,

there were several favorable regulatory changes such as the SEC's approval of spot Bitcoin exchange traded products in the US. We're seeing big institutions

the US. We're seeing big institutions now opting in, not just investment banks and hedge funds, but also sovereign wealth funds and pension funds. In

countries with high inflation or weak currencies like Argentina, Nigeria, Turkey, stable coins are increasingly used as digital dollars.

>> I am less certain with crypto. I like

the idea of decentralization, but I am uncomfortable with how crypto can be used for illegal activities and I don't love the environment impact of Bitcoin

mining. For me, this is closer to

mining. For me, this is closer to disaster insurance. A small hedge

disaster insurance. A small hedge against extreme events where the traditional fiat systems collapse. If

crypto does well, great. The worst case scenario, 5% is the amount I can emotionally accept losing. 2025 is also a reminder of how brutal crypto

volatility can be. In October, we saw a major leverage wipeout, roughly $19 billion US liquidated in a very short window. For us, it was a good

window. For us, it was a good opportunity to build our portfolio. We

use dollar cost averaging and bought on a weekly basis, increasing the investment when prices dropped lower. In

terms of our crypto holdings, we hold around 56% of Bitcoin, which has long-term storage value and is labeled the digital gold. We have around 27% of

Ethereum as it's the technology platform where the real life applications run. If

crypto as a technology grows, Ethereum should benefit too. And we have around 17% of altcoins too. They're smaller but high-risisk side bets. For altcoins, we focus on projects that one solve real

problem, two show growing adoption, and three have a clear credible path where increased usage can translate into greater token value. We also diversify across use cases instead of betting

everything on a single narrative and we sanity check our positioning against what other institutional investors are allocating to. So these are the alts

allocating to. So these are the alts we've selected.

>> So that's the full review of our portfolio in 2025. Overall we are pretty happy with our strategy. So no major change will be made in 2026.

>> We'll reallocate more into crypto until it reaches 5% of our total portfolio. If

any major asset class drifts by more than 5% from our target allocation, we'll rebalance back.

>> There is one lesson we're taking into the new year. Gold. In 2025, gold prices had a historic 70% jump, and we missed that run, which is okay as when you

diversify your investments, there will always be individual assets that outperform the overall portfolio during certain times. But it was a humble

certain times. But it was a humble reminder of diversification. Gold

doesn't move like stocks or bonds. Over

the long term, we are looking for the right opportunities to add a small gold and commodities position to make our portfolio even more resilient.

>> Let us know in the comments if you have any questions and subscribe if you want to follow our journey as early retirees and digital nomads. If you want more context on why we chose this path, check

out these videos about how we decided to quit our jobs and pursue early retirement. See you next time. Bye.

retirement. See you next time. Bye.